Tesco may well be following Starbucks ' strategy of opening up so many outlets that independent competitors are forced out of business, then shutting "loss-making" outlets. Before it shut, staff at the Costcutter on The Cut told me that Tesco had massively (i.e. 5x) outbid them for the site's lease.

Being so large, Tesco can afford to operate outlets at a loss in order to reduce competition in the long term.

Whether such a tactic is legal is a very grey area, of course. In theory, the Competition & Markets Authority should be keeping a very close eye on Tesco and monitoring any activities that may indicate an abuse of its dominant position in the market. Deliberately operating at a loss in order to drive competitors out of the market should be judged to be anti-competitive behaviour. However, the CMA's predecessor (the Competition Commission) seemed to find any excuse to avoid confronting the supermarkets, and there's been no indication so far that the CMA will do anything different.

Political pressure may be more fruitful. The CMA's parent department is run by a LibDem minister (Vince Cable) and we have a LibDem MP (Simon Hughes). Maybe, in an election year, if they both receive enough letters, Simon might have a quiet word with Vince, and Vince might be persuaded to make a few speeches about the dangers of unrestrained capitalism, ask a few rhetorical questions about whether we want to continue to allowing oligopolies to drive SMEs out of business, and make some suggestions to the CMA's leadership that they should adopt a more proactive stance when investigating potential abuses of market dominance.

Dodger Interesting post. Not sure Cable will last the Lib Dem meltdown, but the economics are interesting. The footfall in these shops is good, for the retailer, ( I think the M&S in Waterloo has the highest profitability per sq ft/mtr of any of their stores)

And they have higher prices than a superstore and no special offers. So, it all looks mad to us, but good to the big companies (which your pension is invested in)

I do my very best to avoid these imperialistic sods, but it's out of control. However, we've got to a point where there are sometimes not much else for choice. They've pretty much colonised the whole of the UK's towns and cities. Why do you need 10 or 11 mini supermarkets in one small area such as Southwark?

I have a friend who owns a dry cleaners. A Morrison's opened up around the corner from him, and they open a dry cleaner within, obviously under cutting him. There is nothing that ordinary people can do to compete against these corporate monsters. But the councils, town planners and all representative political parties clearly see it as appropriate to allow this to continue, everywhere.

Expected item in living area.
I do my very best to avoid these imperialistic sods, but it's out of control. However, we've got to a point where there are sometimes not much else for choice. They've pretty much colonised the whole of the UK's towns and cities. Why do you need 10 or 11 mini supermarkets in one small area such as Southwark?

I have a friend who owns a dry cleaners. A Morrison's opened up around the corner from him, and they open a dry cleaner within, obviously under cutting him. There is nothing that ordinary people can do to compete against these corporate monsters. But the councils, town planners and all representative political parties clearly see it as appropriate to allow this to continue, everywhere.

That's what free market economic capitalism is all about.

I urge all those reading this to put this into their pipe and smoke it, and to be sure to remember when it is time for the next General Elections.

Ironically, free market capitalism would generally consider 'perfect competition' (or as near to it as possible) to be desirable. This over-concentration of economic power is antithetical to what drives the efficiency of markets. High barriers to entry and relatively few players creates an impenetrable oligopoly (control by the few)... far less efficient than hundreds of smaller suppliers.

Not that I'd ever expect the 'free market' dogmatists who comprise much of the conservative party to understand. I use the term 'free market' advisedly, because almost any economist will understand the term very differently to the 'yay big business, the poor can go and do one' dogmatists.

There's a reason, for example, that we have the Competition Commission; it exists to prevent mergers and market concentration which are viewed as anti-competitive.

Bunhouse, bang on. I went this pm out of curiosity. I quite like Tescos generally. But this is set up solely for the lunchtime trade. I wanted some salad. No tomatoes and a tiny shelf give over to veg,